Uber Merges Business With Rival in Russia; Could India Be Next?

The ride-hailing company is cutting its losses in difficult markets. Investors ask if India could be next.

Uber is exiting the Russia market. 

(Photo: AP)

"If you can't beat 'em, join 'em", is an adage that could pretty much describe the plight of Uber right now. The ride-hailing service has just exited the market in Russia. It is merging its business with rival Yandex NV in Russia, according to a Bloomberg report.

Uber will invest $225 million for a 36.6 percent share in a new company floated from this merger. Yandex will own 59.3 percent in the new venture, with a $100 million investment.

This exit asks some pertinent questions about other markets where Uber is struggling to make profits, including India. in 2016, Uber exited the Chinese market, striking a deal with rival Didi Chuxing. Uber owns 17.5 percent in Didi Chuxing.

Investors have been focussing on Uber’s losses in markets such as India. The report says investors are asking whether it would be better for Uber to strike a deal with companies such as Ola in India and Grab in South East Asia.

To Uber's credit, its revenues have been improving, at least in the Indian context. In India, in the last financial year, Uber India Systems, Uber's local entity reported revenues of Rs 375 crore, with operating profits of Rs 28 crore, according to a report in The Economic Times. Globally, Uber's losses have narrowed to $708 million in the first three months in 2017, from $991 million in the previous quarter.

In India, Ola has the largest share among ride-hailing apps. Ola also operates in a much larger market, covering 102 cities, while Uber is in only 30 cities in India. The company has been rocked by a series of scandals as well. Recently, Uber CEO Travis Kalanick quit his role at the company, but continues to remain on the board. He is taking a leave of absence following investigations on allegations of sexual harassment in the company.

Also read: Timeline of Events That Led to Uber CEO Travis Kalanick Quitting

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